Using Profit Sharing to Change the Culture of Your Landscape Business. (Landscape Q&A)

Hey, everyone, it's Mike Andes and you're listening to the landscape business course. Today we're going to be answering more of your questions. I think this is like part four of these series of answering all your questions. If you would like to submit your question on another episode, make sure you text the word landscaping to. Hey, everybody, this is Josh here. Just editing the podcast. There was a little mix up. The number given in the podcast for the texting line was incorrect. The number that is correct is 360-227-6362. Once again, the correct number is 360-227-6362 for the texting line. Thank you. Text that number with the word landscaping. And when I need questions, I submit a thing out to everyone and they can submit your questions. All right, before we get started, make sure you sign up for Landscape Summit. 2021 is January 14th, 15th and 16th, about an hour and a half's drive from Seattle's airport. Some people's excuse is that it's in the middle of snow season. You need to come to the conference so you can create systems and a team where you can leave during snow and things don't get dropped. All right? This excuse about being able to not come because you're too busy or because it might snow is not a good. It's not good. You're basically saying, I don't have systems in place. I don't have a team in place that can watch over things when I'm gone. You have not created a job, a business. You've created a job. Please come to the conference. Learn about trusting a team, developing a team, paying a team correctly, and creating a culture where you can leave and you can go work on the business. And that's how a business grows. So I'm not a huge fan of that excuse. I will fly with it. If someone says it to me, I'll say, I understand. But in the back of my mind, I know that that mentality is what will keep them doing that same activity. That same behavior is you've got to break away from the business and work on the business. Come away to the conference three days and work on your business. So come check it out. Landscapebusinesscourse.com conference. Sign up today. Sign up your manager, sign up your spouse, anyone. That's key to making 2021 your day. Best year yet. All right, let's jump into the questions. Let's go. When counting revenue for the month, are you counting invoices paid or the amount of work completed in the month to get your total revenue. All right, so without getting into a whole bunch of technical details, this is cash accounting versus accrual accounting. Accrual accounting is like, when I do the work, I therefore earn that revenue. What? Whereas when I am showing my profit and loss statements in QuickBooks the past couple months, I am showing money collected money, like in the bank account and money that left the bank account. There's no, like, hidden amortization or taxes or interest that's in the background. It's all that's in the bank account and out of the bank account. So it's cash basis accounting. It's not accrual basis accounting where, like, when I send the invoice or when I complete the work, that's when I realized the income on my profit and loss statement. That's what I've been showing you. I've been showing you money in the bank, and I've been doing that specifically because I know that some people.

They share stuff online, they don't do that, and they show when they do the work or when it's invoiced, but their cash flow is so poor, like their cash flow in terms of getting the money back, that it's actually really not a good business. So I'm trying to be as just authentic as possible by doing cash accounting when I'm showing everyone online. Good question, though.

Okay, as an owner. Next question. As an owner, what can I do with my profit and what are the pros and cons of each? Some examples would be, do I wait till until the end of the year so my profit gets actualized on my year financial documents? Do I need to spend it within the business to minimize my tax responsibilities? If I'm not currently growing and using money there, should I. How should I prioritize money? Increase pay and benefits for employees, better equipment, more owner pay, more money in savings. Great question. All right, so a profitable business. What do you do with that money? Okay, first things first. If you're looking to invest in, say, real estate, where you need strong numbers for your tax return, this might be a year where you eat some taxes. Like, you go ahead and pay some taxes in order for you to have a really good profitable year on your tax returns. Therefore, you're able to go buy some real estate and invest in a different sector of the economy besides your business. If your business is very mature and that's kind of where you're at, is trying to diversify and invest in more passive streams of income like real estate or stocks. So if it's real Estate, maybe you take a year where you actualize, like you said, the profits, get it on your financial documents, on your tax returns, and then you have a very strong financials to go to a bank for a real estate deal. Very important because usually.

It'S orders of magnitude with real estate because you usually can borrow 25% and then, sorry, you can put for 25% down and then borrow 75% of the value of the loan. Because that getting 100, if you can put $100,000 more down, that means you can get $400,000 worth more of real estate. So that leverage is, is really, really awesome. That's what's awesome about real estate. You can't do that with stocks or even in your business where you're like, hey, I put a dollar in, but really I get to use $4 in terms of leverage. So if you were trying to do that or you're even purchasing your own house, that might be something you would actualize your income. Otherwise I would be having a sit down talk with my accountant in December and really trying to figure out what exactly is going to be my tax liability, coming up with an exact number and figuring out where that money needs to be spent and, and where it will need to be spent next spring. So if I'm thinking about buying a truck, I might buy it in December, even though I don't need it until February because I want to get that tax deduction and I literally know it's coming up in a few weeks. I hate when people buy it in the middle of June, like, oh, I hope I'm profitable this year, but I'm gonna buy a truck to write things off. It's like, you should make sure you're gonna have a profit that you're actually getting a deduction on and you're actually saving money on taxes. So I always like to sit down in December with my accountant, go over everything like I'm doing my taxes, figure out exactly what that number's gonna be looking like, and then make educated decisions on what I should be buying. In terms of prioritizing the money within your business. I highly, highly, highly, highly, highly, highly recommend you have a profit sharing program. And that's gonna be after you implement P4P. P4P is most important in my mind after that, once you become very profitable, you implement profit sharing. And traditionally, when you're not growing at massive rates, like when you're not going from like 100,000 a year to 800,000 a year, like 2 million, like if you're Growing that fast. It's hard to implement profit sharing because you're buying a lot of equipment and therefore it's affecting the profit sharing program. But when you got to the place where you're very, very profitable and you're more or less just maintaining and not necessarily not growing, just maintaining in terms of trucks and number of people, and you're not like a massive expansion mode. Profit sharing is awesome. Awesome. It's great for culture, it's great for retention. It's great for your employees and your team and their careers. And we're gonna talk a lot about that at Landscape Summit 2021. So you should come. We're gonna talk about how to structure that for your managers, how to structure that for your frontline employees. Do they get buy in? They actually care how to show those numbers to them, Things like that. All right, next question. Salary or hourly for the winter? Chris? All points, Lakes region, New Hampshire. We always do hourly in terms of wages for the field workers.

And they're on P4P. We increase the percentage that they make during the winter because it is less profitable, less dense. It's also very, very, very physically hard in our market. Cause it's always raining, it's always cold. And so for those that are coming, we wanna make sure they're consistently above base pay. Watch my last video about why it's important that they're above base pay on P4P. But we do not give people salary. It's P4P. They got to earn every dollar. And they earn every dollar above P for P that they do earn. Cause it's hard work during the winter. James Brothers Services asks, would you take a commercial mowing contract that pays the same as having 18 residential lawns and causes you to hire one person and purchase one mower? Okay, the metrics here don't make sense because the 18 residential lawns could be $100 a piece, they could be $500 a piece, they could be $30 a piece. And I don't know what the dollar amount is for the mowing contract. What I'd be looking at is what's your hourly rate that you charge a mowing customer for residential? And are you able to charge that much on the commercial? If you can, and that same margin is there, I would definitely do it. I'm not against commercial. We do some commercial, but they're paying a premium price and they're not paying any less.

Than the residential customers in terms of dollars per hour and how much we give in terms of budget hours to the crew. Hi Mike, I live in. Oh, I think I already answered this question. Yes, I did. Okay, cool. All right, let's go ahead and go to the next set of questions. Sorry, there's a whole bunch of questions coming in still. Let me just see here. All right, next question. Cameron from Cozy's lawn care from St. Louis, Missouri. Can you explain one click estimates and how they work? Is this only for service autopilot? I use Jobber. Just looking for thoughts and ideas. Thanks. Side note, looking forward to our zoom call in November. And Lawn Care web design has been working awesome. Cool again. Then he has another question. So. All right, first question. One click estimates. I always talk about monthly newsletters to your customers. Monthly.

Staying in touch with your leads, keeping them warm in the course. I have I think like 10 of them that I showed how we did that. Since then we've improved that though with the franchise. We where inside of service autopilot. We do create an automation where then they click on a button, it triggers the. They don't have to do anything. They just click a button and everything's done. It takes them to a page that says thank you. You will get an estimate to in 24 hours. And on the back end it automatically sends an email to command center. Command center can either set up an estimate or send them the numbers based if they have the numbers in their database already. So it's really just reducing the friction for them to ask for an estimate. And so the the main thing though is if you don't have automation, you don't have service autopilot. You don't have, you know, you're not a part of Augusta is just make sure you stay in touch with your customers and keep them warm on a monthly basis at least. Sending an estimate, sending out a newsletter asking if they want an estimate for specific services based upon the time of year. All very, very important. Lawn care web design been working awesome. Great. Cozy's cool. Another question, your thoughts on door to door sales. Door hangers print marketing during COVID Is your company still doing these type of marketing? Yep, we did some door hangers. Print marketing has been working horribly during COVID It's just the truth. Like I'm just being honest. I've never seen print marketing do so poorly as it has this year. I think it's because people are moving more and more online and yeah, I don't know, we'll still continue to test it next year cause I do feel it'll come back a little bit and the prices have dropped a little bit on some Places. But yeah, this year was horrible for print marketing. Do you keep employees on during the winter with no snow services? Yes, we do what we call winter services. We're going to be talking a lot about this at conference. I'm not going to go into detail here. It's a very. Just take too long. Basically, we're trying to convert our mowing customers that are recurring into where we do winter services throughout the winter months. And we try to retain 70 to 80% of our mowing customers into winter services to keep the cash flow, to not have to lay off everybody, things like that. Hi. When I have so many accounts, it's hard to find someone that's reliable. But when I lost a quarter of my accounts, but now there's people available.

Okay. I'm not really sure what they're asking here. So the next question is the best time for a landscaper to take a holiday or vacation during December, February, when it is slower? Yeah, I think so. That's why we have the conference in January, is because it's traditionally a slower time for people. I know this whole snow thing kind of detracts from what I just said there, but traditionally it's a little bit slower of a time for most people, and so that's why we have it in January. Yeah, it's a great time to take a vacation. For a lot of landscapers, they don't want to do winter services. They don't want to stay busy during the winter. They want to take off for two months or three months and go to someplace else in the world. And that's their lifestyle. And that's awesome. Whatever is working for you is fantastic. But definitely during the slow season, a great time to take a vacation. Although you want to build your business to where you can go anytime if needs be, or if, like, if a family emergency happens, you can leave. Or if you want to come to Landscape Summit, you can come. All right. Kevin from Germantown, Maryland, asks, hi, Mike, for uniforms, which fabrics do you think are best? Cotton versus polyester for shirts and jeans versus cargo for pants. Also, if you require cargo pants, do you require that they buy a specific brand? And if so, do they have an option to buy it from Augusta and get a percentage reduced from their paycheck until it's paid off? Also, boots, what type of boots do you require? Basically, my question revolves around everything. Uniforms. Good. Cool. All right. So we do not provide shoes or boots. They are allowed to wear whatever they want as long as they can get the job done. We don't require steel Toes or anything like that. Whatever they feel is going to be best for them. Usually they figured that out pretty fast after being with the crew. They all talk to each other, figure out what shoes are best in our area. They like the Romeos.

In terms of sweaters, shirts, stuff like that. I think we have. Well, my collar's all messed up. Sorry. I think we have like a blend, like a cotton polyester blend in our shirts. I don't know what this one is. Sorry, I'm not sure what this one is. This is Sport Tech, the brand. And then our other, our shirts are Gildan G I L D A N.

Like I don't know, like some people like the Sport Tech, you know, material. The problem with this is like around thorny things it can start to thread, start coming out and looks all stringy like. So there's pros, there's cons. We stick to the same stuff. We do the patches with the American flag on them for our guys. And how we do it is we get them one pair of pants a year. We get them Carhartt brown pants and they're allowed to get like Dickies or another brand. But they need to be the, the brown color.

So don't dictate the brand. Just as long as it's brownish, tanish at least. And then we get them one of those a year. And then we get them.

They wanna buy shirts and sweaters, we charge em like five bucks. It's $5 for a shirt, $10 for a sweater. Even though it costs us significantly more than that. Just enough for them to not leave them around laying in the trucks and everything. We found that when we didn't charge them anything, they just left them all the time. And we would be cleaning up after them all the time. So what we ended up doing is just chargin dollars, shirts, $10 for sweaters. And all of a sudden they lasted way longer. And when they do need one, they'll just, you know, say ask for one. The office will give them one and take five or ten dollars off of their paycheck. Next question. Mike, what has been the biggest drawback for you and your company? From going from one man to a truck to having two mans in a truck. Two guys in a truck. Drawback from us from going from one man to, to two men in a truck. Not a whole lot. There's a little bit of efficiency reduction when it comes to P4P. They know that it's harder for two guys to make $1,000 in a day than one guy $500 in a day just because of efficiencies, things like that. But in terms of the hardest part from going 2 to 1 is making sure you have P4P so people aren't slacking off. Cause usually 2 people is not only a little bit safer, if you're doing hardscaping jobs, it's safer. We traditionally on projects have two people on a job, but it's also for morale. And that's usually the thing that keeps people from being efficient is the fact that they start sitting on their phone, taking naps, going to gas stations when they're by themselves. So the switch from two people to one person is actually the harder part. Going from two to one, from one to two is most time. They like the morale aspect, they like to be with someone, they get along with each other. It's a little more easy on the hard days. And if it's really bad weather or if we are not behind, use the office will put people together even though they're going to make a little bit less money on an individual basis. Just because it's nice to work with people and it's just nice to talk and have that break. Especially if you've been working by yourself all day, all week.

Besides creating jobs for their community, what other philanthropic things have you seen other landscaping companies partake in? Oh, that's a great question. Number one, I like to care my team and so we focus on profit sharing, things like that. Me personally, I usually do philanthropic things personally, like outside the business, don't talk about it a lot. And that's usually how it's been. I think down the road, Augusta, the whole brand will probably get behind a non profit and give in some way to them. Someone that all of our locations can not just donate to, but like actually get behind and work for and do time for community service, stuff like that. So but in terms of philanthropic things, you know, definitely trying to clean up waste out of your local waterways. Get in touch with your park department. There's definitely usually a non profit in your area that will do that. Also if you are interested, I know one of our franchisees was giving an estimate for snow plowing and salting for a domestic violence housing place. So look up your local area. Like there's, there's nonprofits that provide housing and assistance to families that have suffered abuse or domestic violence and they house them temporarily. And so I think he was just considering putting like salt down or plowing for them for free. And so those are all ways to give back. I'm not a huge fan of like publicizing that I'm not that comfortable yet. I think I will be down the road like the same way that like I'm. I used to be pretty private about my finances and now I share them online with everybody. I think eventually I'll be a little more public about where I'm giving my money on the back end, which almost no one knows about, where I give my money to in terms of philanthropy and giving and things like that. And that's just me. Eventually I'll evolve at a point where I feel like me being public about it brings more attention and positive for that instead of just sharing it because, oh, it makes me feel good and makes me look good in front of people. I don't want to do it for that reason. And that's the main thing. I feel like if you're going to do it with your business, do it so that way you bring your team together as well as have the common good for that nonprofit or cause that you're working towards. Don't do it because you're trying to necessarily get business. That's just my two cents though. Okay, next question. This will be the last one. Then we'll do another video. I'm about to sign a lease on an established landscape material retail yard. There is 13 bins with an office on a major highway in my town. It is and will be a separate location from the yard we work out of. Do you recommend running the two businesses together or starting a new second business just for the retail center? Okay, so you need to watch the video that I made on the last Q and A. Not a huge fan. Especially if you're going to have separate locations. The only way I would do a retail center is if you're in the same place. If you watch the course Module six, the last several videos talk about adding a retail center. I would only do that if you're trying to bridge the gap to where you can afford a full time office person. That's the only reason, the only reason why it's low margin. And if you have separate locations, I would just highly recommend you don't do it. It's a completely different business. It's a high equipment. Like you got loaders, you got dump trucks. You gotta keep an employee there all the time. Fluctuations in demand go up and down. You'll get like 15 deliveries in one day and then like zero the next. You gotta work on weekends and evenings and it's not a great business. The only way I've ever recommended it is to bridge the gap to Have a full time office person. This is the reason why we have command center at Augusta. So people do not need to feel like they need to go start a retail center and get a bunch of equipment so they can afford to have a full time office person. Like that's the only reason I would do it. The only reason I would do it. I'll be very clear about that. And I talk about that in the course. The very first video. People forget the very first video as part of that module. I talk about adding a retail center. I talk about the reason I did it. And that was to afford my first office manager full time. After that, we started taking deliveries away. Then we took all materials away to the public and now we're just back to services that we can scale. We can have very systematized. I can't systematize whether or not customers are gonna come by the dozen or by the hundreds on a specific day or zero. I don't like that. I don't like days when there's employees sitting around waiting for customers to come and no money is being made. I don't like that. I wanna make money every day consistently. Even if it's less. I wanna make it every day. All right, that's the last question for now. I will make another video on Q and A. Make sure that you join us for the course. Not the course, the conference. You should join the course too. Join landscape or lawn care web design too. One of the. One of the people who texted in the day thought it was great. Check it out, Cozneys. So yeah, definitely check those things out. But come to the conference. Just can't overemphasize it enough. Landscapebusinesscourse.com conference three days, me, my team and a whole bunch of other landscapers. They're going to kick Butt in 2021. We'll see you then.